MANCHESTER has been singled out as one of the current buy-to-let hotspots by UCB Home Loans - the specialist lending arm of Nationwide Building Society.

UCB managing director Charles Reed said interest in buy-to-let property was now spreading away from London and the south east.

"Activity has cooled down in areas which saw large price increases a year or two ago and the greatest growth in buy-to-let can now be seen in more northern areas, where house price growth has been catching up over recent months."

The most recent figures from the Council of Mortgage Lenders showed that during the first half of 2002 the number of buy-to-let loans taken out rose by 40 per cent on the previous year.

UCB says the growth reflects people's lower expectations of the performance of savings, shares and pension plans. It expects the market to continue expanding during 2003, although the rate of growth is likely to slow down towards the end of the year.

Reed said: "Property has always been viewed as a safe bet in the long run and in an environment of low interest rates and relatively rapid house price inflation, many people have been looking in this direction for a combination of income and capital growth."

He recommends people take a long-term view of between seven to 10 years when considering buying a property to rent, and focus on the rental income they will get from the property rather than its potential to make a quick gain from a short-term rise in house prices.

Rental yields vary from area to area, but UCB said landlords could generally expect seven to 10 per cent of property value in the more active parts of the country, and nearer five per cent in areas where house price rises have slowed down.

Newcastle Building Society's new offset variable mortgage is a Bank of England base rate tracker with an initial rate of 3.9 per cent (0.1 per cent below base for six months), reverting to 0.5 per cent over base for the remainder of the term - a pay rate of 4.5 per cent.

There are no early repayment penalties. The mortgage is available now online, and in branches by end of the month. Further details available from : 0845 606 4488 or www.newcastle.co.uk